Along with the announcement, Sumner makes a few observations about where they agree and closes with this:
George also favors a somewhat lower NGDP target than I favor, which leads him to put more weight on policy errors that occurred before 2008. I like the way he ends the post:
Am I suggesting that the Fed could not possibly have done worse? Of course not. Only someone with a severely defective imagination could suppose so. Whatever his shortcomings, Ben Bernanke was far from being an incompetent central banker. In suggesting that we might have done better than Bernanke’s Fed did, I don’t mean that we could have used a better discretion-wielding central banker. I mean that we might have been better off avoiding seat-of-the-pants-style central banking altogether.
I struggle, moreover, to understand why more people don’t take the same view. For if it takes a stunted imagination to suppose that things couldn’t have been worse, it takes a no-less defective one to suppose that we couldn’t possibly improve upon the presently-constituted Fed. Far [from] supplying grounds for celebration, or warranting complacency, the events of the last decade or so ought to make it more evident than ever that our monetary system is very far from being the best of all possible alternatives.
He doesn’t make it clear what “putting more weight on policy error that occurred before 2008” means. But he does include, in the quote from Selgin’s blog post, the most charitable praise I’ve yet read heaped on Bernanke and the Bernanke Fed from a market monetarist, charity I believe is unwarranted and find rather mystifying.
The mystery is a little less perplexing if considering that the weight put on policy errors prior to the financial crisis is likely more of “too low for too long” variety of which Bernanke could not possibly have been a part, and to which I do not subscribe. There is almost no reasonable way to draw the NGDP trend line as to create that kind of distortion.
Moreover, I have documented the political aspect revolving around the adoption of the explicit inflation targeting regime that began nearly as soon as Bernanke became chairman, as well as the behavior of the base and household/non-profit cash and checkable deposit activity that appear to be correlated to the crisis beginning in early 2007 in such a way that probably made the Great Recession inevitable with only the severity subject to mitigation tactics that were not tried, and instead was complicated by sterilization of crisis loans, an over-reliance on inflation forecasting models, the introduction of IoER and probably other policies that tightened the policy stance on top of a greatly weakening economy from IT gone wrong.
The entire crisis is one that ought not to have happened. And arguably, the Bernanke Fed created a larger economic disaster than the Burns Fed, and I surely have not seen any defense of its indefensible policy performance. One would think that given the magnitude of impact the Bernanke Fed’s performance is worth being treated with at most the same charity by history, but somehow, and for some reason it gets a pass.
Perhaps this is why the political system has been moving at a snail’s pace to rein in the antics of an unaccountable Fed, because an overabundance of politeness and charity obscures the cold hard facts about what it actually did and in which it authority it did it. As if the despicable and deceptive Fed propaganda heaped on the public isn’t enough of an obscurity, this unwillingness to at least put the situation in the context it deserves on the part of people who have a handle on what transpires does nothing to enlighten or affect change so that it can never happen again.